The botched bailout of Cyprus is exacerbating a credit crunch among small
businesses in Southern Europe and deepening the rift between the eurozone’s
periphery and its core.

Philippe Bodereau, the head of pan-European credit research at Pimco, the
investment giant, said that the eurozone had broken multiple “taboos” by
introducing capital controls and threatening insured depositors during the
Cyprus rescue package, thus worsening the credit drought in the periphery.

“There is a lot of unnecessary pain because authorities are only reacting
under market pressure. We are doing it the hard way,” he said.